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Raiding the Piggy Bank

Tradition in my family dictates that every pink and perky baby receives a coordinating pink and perky piggy bank. Some piggies are plump and some are petite. Other piggies are silent when coins drop and some oink up a storm. Some require a hammer to share the wealth while others just require a twist of the fingers. My child’s favorite is the bottomless piggy bank where money goes in and it comes right out again in a never ending stream of cash.

As a business owner, knowing whether to choose a piggy bank that is plump or petite, silent or loud, locked up tightly with strings attached or open ended is an important step in building your business. When it’s time to pick a piggy, consider your type of business, financial need, credit history and economic conditions. Options for financing include:

Self-Funding

If your start-up costs are minimal and you want to keep financial entanglements to a minimum, reaching into your own pockets to fund your business may be a good choice. Self-funded companies work well when your overhead is low, you have enough seed money to support most of your day-to-day operations for at least a year, and your debts are limited.

Third-Party Financing

Third party financing may be an option if you have a good credit rating and have start-up and operating costs that you cannot cover out-of-pocket. Lending options and terms vary by bank but some financing plans to investigate include:

  • Small Business Administration Loans
  • Bank Lines of Credit
  • Bank Loans
  • Grants

Investor Financing

Another option for funding your business is to seek investors. These are people such as family and friends and angel investors who will provide you seed money with the expectation of receiving a financial return on their investment.
Learn more about managing a home business in Managing Your Business the Toddler Way by Michelle Novak.
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